Termination of sub-licence by Monsanto with Indian co illegal: Delhi HC

The court, however, rejected the stand of the three companies that Monsanto was incorrectly granted the patent for its BT cotton seeds.

By: PTI | New Delhi | Published: March 28, 2017 10:14:13 pm

The Delhi High Court on Tuesday held as “prima facie illegal” the decision of US-based agro major Monsanto Technology to terminate its sub-licence given to three Indian companies for making and selling BT cotton seeds.

The court’s ruling came while dismissing Monsanto’s pleas against Nuziveedu Seeds Ltd, Prabhat Agri Biotech Ltd and Pravardhan Seeds Private Ltd for allegedly infringing on its patent and trademark in BT cotton, a genetically modified variant which resists bollworms.

The court, however, rejected the stand of the three companies that Monsanto was incorrectly granted the patent for its BT cotton seeds.

In his 96-page judgement, Justice R K Gauba said Monsanto “was duty bound” to consider the seed companies’ request for modification of the terms of the sub-licence with regard to the trait fee, and since the US company “did not adhere to its obligation”, its demand for a fee higher than what was permitted by law was “not lawful”.

“As a sequitur (a logical conclusion), the termination of the sub-licence agreements by communications dated November 14, 2015 appears prima facie to be illegal and arbitrary,” the court said and added the parties continue to be “locked with each other” in the arrangement under the 2015 sub-licence agreements prior to their termination.

The court also said since the termination of contract has been held to be prima facie illegal and the three companies having benefitted from the patented technology after entering into the agreements, they cannot now turn around and say they cannot be bound by the sub-licence terms.

It also made it clear that any trait fee chargeable would have to abide by the Cotton Seeds Price (Control) Order 2015 and the Licencing and Formats for GM Technology Agreement Guidelines of 2016.

The court further said that as long as the sub-licence agreements continue to be in force the three Indian companies “cannot be injuncted against the use of the suit patent or the trademarks”, but the right to use the patent or trademarks would not be unconditional.

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